The Trump administration has sent $10.5 billion in cash to producers since mid-August to mitigate the impact of the Sino-U.S. trade war, aid that comes on top of $8.6 billion paid for 2018 crops and livestock. “Yes, [the payments] are helpful,” said a Kansas banker on Wednesday — and the government should keep writing the checks.
Steven Handke, testifying on behalf of the Independent Community Bankers of America, said a survey of nearly 2,000 ICBA members active in farm lending found that the stopgap Market Facilitation Program payments have helped farmers survive low commodity prices, weather damage to crops, and trade disruptions. “And they should continue until prices become stable and rebound,” said Handke at a House Agriculture subcommittee hearing.
The trade war payments improved farmers’ financial standing this year, but ad hoc payments cannot be used when bankers meet with farmers to project their income, and loan eligibility, for next year, said ag banker Shan Hanes, appearing on behalf of the American Bankers Association. “We cannot put anything on next year’s cash flow and we have a tax liability situation” for this year.
Marc Knisely, a North Dakota lender speaking for the federally chartered Farm Credit System, said farmers are becoming stressed “and farm portfolios are beginning to show it.” Low interest rates, stable land values, and off-farm jobs are helping growers, who are cutting expenses where they can, he said. But “soon many farmers will need to see better price levels to survive.”
In a weekly update, the USDA said trade war payments for 2019 production have totaled $10.47 billion, with the leading states being Iowa, at $1.17 billion; Illinois, at $1.08 billion; Minnesota, at $790 million; Texas, at $786 million; and Kansas, at $732 million.
To watch a video of the hearing, click here.